REG-M&C Saatchi PLC Acquisition
Released : 05/07/2007 06:01
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RNS Number:6964Z
M&C Saatchi PLC
05 July 2007
M&C Saatchi PLC
5 July 2007
M&C SAATCHI PLC
("M&C Saatchi" or the "Company")
M&C Saatchi to acquire Clear Ideas Limited ("Clear")
M&C Saatchi plc is pleased to announce that it has agreed to acquire all of the
issued shares in Clear for an initial consideration of £18.4 million.
Clear was established in 2002, and has become a top 5 brand consultancy in that
short time. Clear employs 80 people with offices in London, New York and
Amsterdam and has 35 blue chip clients, with over 80% of their clients giving
repeat business. Its full service offering includes bespoke advice and training
on brand strategy, new product development and qualitative research. Last year
Clear delivered revenues of £12.7 million and operating profits of £3.0 million.
At the end of May 2007 Clear had net assets of £ 2.5 million.
The five founding directors, Melvin Jay, Alistair Moore, Jonathan Williams, Dr
Steven Melford and James Osmond will remain as directors of Clear. In addition
David Kershaw and Jerry Wales have been appointed to the board of Clear.
The consideration for the acquisition of Clear will comprise:
-initial consideration of £18.4 million, which will be subject to a
completion accounts / net asset adjustment, which is expected to be £1.8
million, of which £0.3 million will be deferred until September 2007 and
£0.8 million will be deferred till June 2008. The initial consideration will
be satisfied by the issue of 3.4 million shares in M&C Saatchi (30% of the
initial consideration), with the remainder satisfied by a cash payment of
£13.6 million. The cash element of the consideration will be largely funded
by a new debt facility provided by RBS to a maximum of £13.0 million.
-deferred consideration, of £2.5 million which is dependent upon the
profits of Clear exceeding £3.0 million for the financial period commencing
1 April 2007 and ending 31 March 2008. This payment is expected to be made
in June 2008, and will be satisfied by the issue of shares in M&C Saatchi to
the value of 30% of the deferred consideration, with the remainder to be
satisfied by cash; and
-contingent consideration in the form of an earnout, which is dependent
upon the profits of Clear in the financial years ending 31 December 2007,
2008, 2009 and 2010. These payments are expected to be made around 31 March
2009 and 31 March 2011, and will be satisfied by the issue of shares in M&C
Saatchi to the value of 70% of the contingent consideration, with the
remainder to be satisfied by the issue by M&C Saatchi of loan notes. 25% of
the contingent consideration will be paid to employees of Clear via an EBT
trust and will result in an IFRS 20 charge in 2009 and 2011.
If Clear performs as expected the acquisition will contribute revenues of £6.0
million and operating profits of £1.3 million in 2007. On this basis the
transaction will be earnings enhancing.
The acquisition agreement includes warranties, indemnities and protections in
favour of M&C Saatchi that are usual in a transaction of this nature. It is
anticipated that the initial consideration shares will be admitted to trading on
AIM on 11 July 2007.
David Kershaw, Chief Executive of M&C Saatchi plc, said:
"This deal is consistent with the Company's growth strategy of enhancing strong
organic growth with selective acquisitions in attractive growth territories and
in higher growth / margin disciplines. Over 50% of our business will now come
from activities outside of traditional advertising creation. We are delighted
that the Clear team will bring a new and important dimension to our already
strong offering in the marketing services arena."
Melvin Jay, Director and one of the founders of Clear said:
"I am pleased that this deal creates great opportunities for Clear, M&C Saatchi
and both sets of clients. Both organisations passionately believe that great
thinking & creativity delivered with clarity and commercial pragmatism can truly
help clients to find the growth opportunities they need."
For further information:
M&C Saatchi plc 020 7543 4500
David Kershaw, Chief Executive
Melvin Jay 020 7353 4200
Clear Ideas Ltd
Numis Securities Ltd 020 7260 1000
Charles Farquhar / Lee Aston
Tulchan Communications 020 7353 4200
Celia Gordon Shute
Notes
Clear has a team of over 70 experienced insight, innovation and strategy
specialists delivering work for some 35 blue chip clients. The business was
founded in 2002 by Melvin Jay, Alistair Moore, Jonathan Williams, Dr Steven
Melford and James Osmond and is based in Richmond.
This information is provided by RNS
The company news service from the London Stock Exchange
END